Ahead of the cryptocurrency exchange Coinbase’s listing on the U.S. stock market, the S-1 form stock listing report submitted to the U.S. Securities and Exchange Commission (SEC) was released. Accordingly, the speculation that Coinbase will be listed directly on Nasdaq without a host company turned out to be true.
The movement of Coinbase’s listing on the US stock market was detected for about 7 months. In the summer of 2020, rumors first came that Coinbase is considering an immediate listing on the US stock market. Coinbase did not comment on this until December.
At the time, Coinbase officially announced that it had privately filed an S-1 form stock listing declaration with the SEC. Coinbase did not disclose whether the plan to list Class A common stocks without a host company was true until last month.
As the listing declaration submitted by Coinbase was released, Coinbase’s financial performance and fundraising plans were first revealed to the outside.
The future of Coinbase
According to the listing declaration, Coinbase’s future as a company is not so bright.
Coinbase said in the report, “We predict that operating costs will increase significantly in the near future,” and “There is a possibility that it may be difficult to make profit or maintain cash flow through stable operation.” Accordingly, “Coinbase’s business, operational results, and financial conditions may be negatively affected.”
“For example, in 2020, we had a net profit of $322.3 million, but in 2019 we had a net loss of $30.4 million.”
Coinbase also stated that Goldman Sachs and JP Morgan could be used “to get help with specific issues related to listing.”
Coinbase wrote, “I apply for listing Class A common stock on the NASDAQ Global Select Market with the ticker code of’COIN’.”
According to Wilson Sonsini’s Goodrich & Rogerty Law Firm, once the Form S-1 listing is in effect, the pricing committee then determines the listing price of the security. However, securities trading may not be possible until the day following the effective date of the declaration.
Based on the closing price of shares traded in the secondary market last week, Coinbase’s corporate value is estimated to be about $100 billion. Based on the previous week’s closing price, the coinbase business value was about $77 billion.
Coinbase also revealed on the 25th that it has included cryptocurrencies such as bitcoin on its balance sheet since its establishment in 2012.
Potential Risk Factor
In the report, Coinbase cited the competition with DeFi and the actual identity of the pseudonym Satoshi Nakamoto, known as the founder of Bitcoin, as potential risk factors.
Coinbase did not explain in detail how the revealing of Satoshi Nakamoto’s identity would affect the business. However, as CoinDesk reported in May 2020, there was a slight fluctuation in the market price due to the on-chain data moved by Bitcoin, which is believed to be owned by Satoshi Nakamoto.
Coinbase saw that “negative preconceived notions about Bitcoin or Ethereum” and “social media coverage of cryptocurrencies or the unpredictability of trend changes” could also act as risk factors.
DeFi was also cited as a potential risk factor. Coinbase said, “With the increase of decentralized and non-trusted platforms in which users do not manage private keys, failure in competition with them may have adverse effects on business.” Coinbase specifically cited DeFi protocols implemented above such as Ethereum, Tron, Polkadot, and Solana.
Another point to watch
The listing declaration also revealed that Brian Armstrong, the founder of Coinbase in 2012, received about $56.6 million in salary, stock options, and’all other compensations’ in 2020. This is the highest amount among Coinbase executive wages.
Of the $56.6 million Brian Armstrong received, the most consisted of stock options and a base salary of $1 million. In addition, he received an additional $1.78 million in personal security expenses. Coinbase said in the report, “We saw that Brian Armstrong’s personal security expenses correspond to reasonable business expenses.”
Translation and editing: Insun Jeong/Coindesk Korea
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